Morals in a Market Bubble

26 Pages Posted: 17 Jun 2010 Last revised: 16 Jan 2012

See all articles by Robert T. Miller

Robert T. Miller

University of Iowa College of Law; New York University - School of Law, Classical Liberal Institute

Date Written: June 16, 2010


In this short piece, I respond to the idea that the financial crisis of 2007-2008 was caused by a frenzy of immoral practices in the real estate and financial markets. I argue that such a theory is fundamentally misguided. In reality, the Federal Reserve’s unduly accommodating monetary policy in 2002-2006 and certain structural features of the relevant financial markets (especially subprime loans) combined to produce a bubble in the residential real estate market in the United States. This happened not because of moral wrongdoing by market participants but as a result of individuals rationally pursuing their economic self-interest (a) in response to the economic incentives that had been created for them, and (b) in ways normally regarded as morally unproblematic. The causes of the bubble and the crisis were thus economic, not moral.

Keywords: financial crisis, bubble

Suggested Citation

Miller, Robert T., Morals in a Market Bubble (June 16, 2010). University of Dayton Law Review, Vol. 35, 2009, Available at SSRN:

Robert T. Miller (Contact Author)

University of Iowa College of Law ( email )

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(319) 335-9034 (Phone)


New York University - School of Law, Classical Liberal Institute ( email )

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